New York – Stocks retreated Thursday as Wall Street took a breather from this week’s rally, sobered a bit by mixed earnings reports, a tumbling dollar and surging oil prices.
Wall Street had driven the Dow Jones industrials up more than 400 points in two days after the Fed’s half-point rate reduction, so it was to be expected that investors would eventually stop to cash in gains.
So when a few major companies, particularly Bear Stearns & Cos. and Circuit City, posted wider-than-expected drops in third-quarter profit Thursday, Wall Street’s giddiness following the Fed’s rate cut waned and nervousness resurfaced about how long it might take for the economy and corporate America to rebound from the recent market turmoil.
“Historically, after the Fed eases, the market takes about a month to figure out whether the easing was a good thing or a bad thing,” said Brian Gendreau, investment strategist for ING Investment Management.
Although the credit markets are improving, investors remain worried about the economy dipping into recession and unsure of where to put their money, Gendreau said.
Wall Street did get some good news Thursday. The Labor Department said jobless claims declined by 9,000 last week, despite August’s decrease in payrolls, and Goldman Sachs Group Inc. reported a surprisingly large 79 percent profit rise in the third quarter.
The Dow fell 48.86, or 0.35 percent, to 13,766.70.
Broader stock indexes also declined. The Standard & Poor’s 500 index fell 10.28, or 0.67 percent, to 1,518.75, and the technology-dominated Nasdaq composite index fell 12.19, or 0.46 percent, to 2,654.29.
